Procurement in a nutshell – draft utilities regulations

For the draft Utilities Contracts Regulations in full, please click here.

What’s new?

The Utilities Contracts Regulations 2016 will apply broadly to Contracting Authorities (e.g. the government or local authorities) who carry out an activity referred to in regulations 9 to 15 (this includes water, electricity, gas and heat, transport, ports and airports, postal services, extraction of oil, gas and coal etc.) or to those who are not Contracting Authorities but carry out such activities on the basis of “special or exclusive rights” granted by a competent authority (such as the utility companies).

Those familiar with the Utilities Contracts Regulations 2006 will note some significant changes in the scope of the regulations:

• The indicative list of utilities has been removed so Contracting Authorities and other entities will have to consider if they are caught; and
• The definition of “special and exclusive rights” has been altered so that entities will not be caught by the Regulations where the rights to carry out the activity were granted by means of a procedure in which “adequate publicity has been ensured” and “where the granting of those rights was based on objective criteria” i.e. where there was an advertised competitive procedure.

Other important points to note include:

• The regulations will apply to Utilities Contracts over £345,028 (for supplies and services) and £4,322,012 (for works);
• UK exemptions for the electricity generation, the supply of electricity and gas and the exploration of oil and gas in England, Scotland and Wales still apply.
• The Innovation Partnership and Competitive Procedure with Negotiation procedures are now available to Utilities.
• Similar to the Public Contract Regulations 2015, the light touch regime will apply to procurements for social and other specific services above a threshold of £833,400.
• As well as procedural changes, Contracting Authorities / Utilities and others should be aware of other issues covered by the regulations; as with the Public Contracts Regulations 2015 and the draft Concessions regulations this includes new rules governing the electronic availability of tender documents and communication, exclusions for “Teckal” companies, rules for the modifications of contracts during their term and the inclusion of termination provisions (either expressly or implied).
• The remedies regime that applies is very similar to that under the Public Contracts Regulations 2015.

Why is it important?

These regulations will be important to any Contracting Authorities or Utilities. The change and clarification of the definitions mean that entities will have to scrutinise the regulations to see whether they and their activity are covered by the regulations. Like the draft Concessions Regulations, the Utilities Contracts Regulations will come into force on 18 April 2016.

How can I find out more?

If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.